Cash ISA - tax amount?

Maccy

Maccy

Maccy

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Can't seem to find the answer to this anywhere online so hopefully someone knows.

The tax-free amount for a cash ISA is £5,640 for this financial year. I've already opened my ISA and put in under the limit, however I want to know how much would I have been charged if I'd put in, say, £6,000?
 
Presumably the financial institutions should have systems in place to prevent you paying in more than the allowance.

However:

What happens if I put too much into an ISA by mistake?

If you exceed your annual ISA allowance by paying more than £5,640 into a Cash ISA or £11,280 into ISAs in total, any money over the limit will not qualify for tax free status.

So while any money within the ISA allowance limit will earn interest or returns tax free, anything over will be liable for tax.

If you find that you have paid too much into an ISA you should contact the HMRC ISA Helpline to explain the problem as they will inform you of whether you need to take any action.
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£5,640 is the MAXIMUM that you can put in ...

Every account I've ever used won't let you physically put more than that in .
 
Basher said:
£5,640 is the MAXIMUM that you can put in ...

Every account I've ever used won't let you physically put more than that in .
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That was my understanding too. I've always needed my NI number to open them, so I presumed it was also linked to HMRC as well as the institution providing it.
 
Ok, so what if I try to deposit £6k in next week? Or are you saying the system just won't let me do it then too?
 
It will just take the limit and return what's left.

You still have time on this years if you haven't reached the limit, so chuck the £360 in now and the rest in the new tax year.
 
We were discussing ISAs and tax in the office earlier, someone asked about the tax charges and none of us knew or could find it online!
 
Yes I'm aware of that, I was led to believe that if I was to deposit more than that in a financial year then it would be liable to tax-charges?
 
Maccy said:
Yes I'm aware of that, I was led to believe that if I was to deposit more than that in a financial year then it would be liable to tax-charges?
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An ISA is a tax free savings product. You'd just put the rest in a normal savings product which of course you'd pay your normal tax on.
 
It probably is possible to deposit more in to an ISA however not specifically a cash ISA, which will be capped.

I recently opened a S&S ISA via a different provider which displays the full allowance £11,280, as it can't account for existing cash ISA's I created in the same tax year. A little bit of common sense and simple math provides the remaining allowance.

Maccy, put in the full allowance this year and what ever's left in to a cash ISA for 2013-2014. Or stick the surplus in to a S&S.
 
A year or two ago, I mistakenly paid too much into one of my Cash ISA's which took me over whatever threshold was set that year.

I simply got a slapped wrist by way of a letter and the money was transferred back into my current current.

Interestingly, I transferred the incorrect monies via online backing and I wasn't warned of my mistake as I was doing this. Perhaps measures are in place to stop this now.
 
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If you try to pay in £6k to a single ISA, the bank shouldn't let you.

If you try to subscribe to two cash ISAs (not allowed with any amount) or exceed the allowance by using both cash and S&S, HMRC will eventually catch up with you as all ISA deposits are reported to them.

For a first offence, the remedy for exceeding the limit is usually that the offending amount is taken out of the ISA and the tax you would have paid on it is taken by HMRC. If you pay into two cash ISAs, but below the total limit, then you get a letter from HMRC saying "Naughty boy, don't do it again."

If they think you did it deliberately or you are a repeat offender then you can get a proper tax fraud case going against you and have every transaction you ever made looked at.
 
Q. What if I pay too much money into my ISAs?
A. If, by mistake, you put too much money into your ISAs (more than £11,280 in the tax year 2012-13, of which up to £5,640 can be put into one cash ISA), the excess payments are invalid, and you are not entitled to any tax relief on investments purchased with the excess payments.

You should not try to correct this mistake yourself. Where appropriate, HMRC will contact you after the end of the year and tell you what action is necessary.
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Basically if you try and pay more in, "most" banking systems will reject the payment of say £6,000 into the cash ISA. Almost certainly you would not be able to actually make the payment. It's "easier" to overpay into a S&S via an online fund-supermarket etc as they will initially accept the payment.

Also the only way most,if any, ISA are overpaid are when you use 2 different providers (which is not allowed) in the one tax year.
 
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